More than $11 Billion has been hacked from cryptocurrency exchanges since 2011. That’s a lot of money.
In 2014 740,000 BTC was stolen from Mt. Gox, worth $6.5 Billion at the time and a lot more now. That was ~6% of the circulating supply of Bitcoin. It had a huge effect on the markets and massively suppressed the price for quite some time.
Despite the cultural impact this exchange hack had on this space, security issues have plagued this industry every single year without fail. Numerous large scale exchange hacks have followed the Mt. Gox incident.
Cryptocurrency enthusiasts will be quick to tell you ‘not your keys, not your coins’ – but what are your choices when centralized exchanges offer an arguably better service versus their decentralized counterparts?
Centralized vs Decentralized exchanges
Everybody wants something different from their exchange. Some people only want high leverage and deep liquidity. Others are mostly concerned with security. Opportunists want access to as many trading pairs as possible while remaining anonymous.
Centralized exchanges are chosen for a number of reasons, such as:
- Many perceive them as more reliable.
- Easier to use with better user experience.
- Customer support.
- More active traders and therefore better liquidity.
- Can be regulatory friendly.
However, decentralized exchanges (DEXs) have some compelling selling points too:
- No centralized authority controls the exchange (in most cases).
- You have complete control over your funds.
- Stores transactions on-chain instead of a centralized database visible only to the managing party (as is the case with centralized exchanges)
As you can see, there are compelling reasons to use both types of exchange. Basically, it’s easier to use a centralized exchange, but your funds may well be safer if you use a decentralized exchange. It’s a tough compromise.
To fill this gap, the team behind NEXT.exchange are building their trading platform as a hybrid system. NEXT is working on providing its future traders with everything they could need, under one hood.
What exactly is a Hybrid (HEX) cryptocurrency exchange?
A hybrid cryptocurrency exchange is the coming together of features and functionality taken from both centralized and decentralized cryptocurrency trading platforms. This methodology enables users to enjoy the efficiency and ease-of-use of centralized exchanges with decentralized perks. Let’s dive into some of the aspects that make NEXT.exchange an interesting future option for the cryptocurrency space.
Decentralization and Centralization combined
According to one of their recent blogs, NEXT.exchange utilizes a centralized matching system in combination with a decentralized wallet system. What this means, essentially, is that individuals using the NEXT.exchange platform will have their own individual wallets. And according to their CTO, their system will provide users with a trading and main wallet. Users will be able to access their private keys to their main wallets. What this means is that there is no centralized wallet that holds all user funds at a single time, this thwarts bad actors, instead, there is simply an order matching system for trading wallets.
Additionally, the NEXT team has stated that they will be building mobile and desktop applications so that users can continue trading even if their website goes down. And guess what, this app will be built using their Hybrid PoS/PoW Blockchain, NEXT.chain as a backbone. The team has stated that they will provide a portal through which NEXT.chain Masternode holders will be able to vote on the future development path of NEXT.exchange.
Their own Blockchain
This is where NEXT.exchange majorly differs from many trading platforms in the space. Decentralized exchanges typically make use of an already existing Blockchain, mostly that is Ethereum. There are very few other platforms that employ their own Blockchain, and even then, they do not integrate it directly with their platform. Centralized exchanges don’t make on-chain transactions for trades, they just switch numbers in the back end because all funds are stored together. However, NEXT.exchange makes direct use of NEXT.chain in terms of transaction records. Each trade will be reflected on their Blockchain for the purpose of transparency.
To do so, the team makes use of shadow or copy assets, which will utilize their Blockchains native capability and 00X asset creation standard.
Providing access to a multitude of various Blockchains and fiat functionality.
Given its Hybrid build, NEXT.exchange is not limited to the types of assets which they can offer, as opposed to a purely decentralized exchange such as IDEX that can only provide access to ERC-20 assets deployed on the Ethereum blockchain. NEXT users will be able to trade 00X, ERC-20, NEO based, NEM Mosaics, and various other assets of respective Blockchains, together with fiat pairings (after having completed KYC).
A loaded utility coin
It is typical for many exchange platforms in our industry to have their own asset which unlocks utility. Well, it can quite literally be said that the NEXT coin acts as the lifeblood for NEXT.exchange, NEXT.chain, and NEXT.genesis (their crowdfunding platform). Holders of NEXT (Total supply: 30,300,000, circulating: 6,228,754, with 3575000 soft locked in Masternodes) gain access to: decreased trading fees, fiat gateways, trading fee redistribution, priority access to trade newly listed assets, access to staking of PoS assets, the ability to create assets, launch Masternodes to accumulate more NEXT, and a whole lot more.
Hybrid exchanges could be the solution that cryptocurrency traders have been looking for. With the strengths of centralized exchanges combined with the safety and security of decentralized exchanges, what’s not to love?
Stay tuned for more coverage on NEXT.exchange and be sure to follow their official Twitter and Telegram chat.
*Disclaimer – NEXT are our Media Partners and therefore this content is sponsored by them. The fees paid by this project are used to pay for The Daily Chain salaries, dev work, hosting services, travel expenses etc.. that are required to make this company a success and continue to provide the community with great content on a daily basis.